William A. Brandt Jr., the turnaround specialist who was tapped Monday to handle the cleanup job at Mercury Finance Co., has had a hand in writing the rule book that he may soon have to follow.

Mr. Brandt, 45, a friend of and sometime adviser to President Clinton, has been credited with helping to formulate the Bankruptcy Reform Act of 1994. He also lobbied for the appointment of Brady Williamson as director of the Bankruptcy Commission.

The Lake Forest, Ill., auto lender, which disclosed last week that it had overstated earnings by $90 million over the past four years, is widely expected to seek bankruptcy protection, but had not done so at press time.

"I put their chances at between zero and none" to emerge without filing for bankruptcy, one analyst said. Mercury hired Mr. Brandt to replace John N. Brincat as president and chief executive officer in the wake of an accounting fiasco that rocked the subprime lending industry.

Mr. Brandt, president of a Development Specialists Inc., Chicago, could not be reached for comment Monday. In a prepared statement, he said he would be putting the "building blocks in place for the new Mercury Finance."

Mr. Brincat, who will remain as an employee and director, issued a statement saying Mercury was best served by a new, independent chief executive. Mr. Brandt and executives from his firm spent yesterday meeting with Mercury's creditors. On Friday, the firm had defaulted on a $17 million payment to creditors.

Along with a 20-year history as a bankruptcy and turnaround specialist, Mr. Brandt boasts close ties with the Democratic Party, and entertains President Clinton at his home, a spokeswoman for Development Specialists said. Turnarounds & Workouts, a trade publication, identified him as an adviser to President Clinton on bankruptcy issues.

Despite his political ties, other turnaround specialists seemed puzzled by the choice of Mr. Brandt. An executive from a rival turnaround firm said he is best known for working with smaller companies. "I'm really surprised, because I know how huge Mercury is," said this source, who did not want her name used.

The jury is still out on Mr. Brandt's effectiveness as a turnaround pro. Southeast Banking Corp., which Mr. Brandt ran before its sale in 1991 to First Union Corp., is described by one First Union analyst as "still a mess."

After the sale, Mr. Brandt, representing Southeast, sued First Union, claiming the Charlotte, N.C., banking company had misused confidential information to persuade regulators to seize the bank, thus dragging down the purchase price.

According to the Pittsburgh Business Times, Mr. Brandt was fined for misrepresenting his credentials while working on a Milwaukee bankruptcy case.

Mr. Brandt allegedly testified in court that he had obtained a master's degree from Harvard University and that he had been employed by the Central Intelligence Agency-both fabrications, the paper said.

Mr. Brandt's spokeswoman said she was not aware of any such charges. His resume now lists a bachelor's degree from St. Louis University and a master's degree from the University of Chicago.

In related news, Mercury's stock closed Monday at $1.75, down 37.5 cents. J.C. Bradford & Co. analyst Henry J. Coffey downgraded the stock to "sell" from "strong buy."

Also, Mercury issued a press release Monday saying the company was "cooperating fully" with federal investigators who executed a search warrant at the company's headquarters.

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